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The CFPB Tuesday issued an updated small entity compliance guide for its ability to repay (ATR)/qualified mortgage (QM) rule to account for recent changes made to the general QM definition and creation of the new category of seasoned QMs.

In addition to revising the guide, the bureau released a statement indicating that it is considering a possible rulemaking to revisit the seasoned QM rule. It also plans to soon release a proposed rule to delay the mandatory compliance date of the general QM definition rule currently set for July 1, 2021. Once the proposal is issued, creditors would be able to use either the current or revised QM definition for loan applications received between March 1, 2021, and the delayed mandatory compliance date.

NAFCU consistently shared credit unions' concerns related to QM changes that could adversely impact low- and moderate-income borrowers and sought a delay to the rule, as well as changes to the proposed definitions.

Under the final rule related to the general QM definition:

• the temporary government-sponsored enterprise (GSE) patch will expire July 1, 2021 – the general QM rule's current mandatory compliance date; however, if a proposal to delay the rule is issued, the temporary GSE patch will remain in effect until the new mandatory compliance date or the GSEs are removed from conservatorship;
• how a credit union must determine ability-to-repay (ATR) for a general QM loan is revised by replacing the debt-to-income (DTI) threshold with a comparison of the loan’s annual percentage rate (APR) to the average prime offer rate (APOR) for a comparable transaction;
• a separate threshold for a safe harbor QM and a rebuttable presumption QM remains intact; and
• Appendix Q is eliminated and the requirements that a lender must consider and verify are included in the regulations.

The seasoned QM rule allows a non-QM to gain QM status after a 36-month seasoning period and given certain portfolio and performance requirements are met. The final rule also provides restrictive performance criteria, including no more than two 30-day delinquencies and no 60-day delinquencies, unless a qualifying change occurred.

Member credit unions can get more details on the general QM and seasoned QM rules in NAFCU's Final Regulation summaries.